Which of the following statements best describes convertible bonds?
A)They can be turned in for early retirement at the option of the bondholder.
B)They can be converted to common stock at the option of the bondholder.
C)They can be called for early retirement at the option of the issuer.
D)They can be converted to common stock at the option of the issuer.

Question

Quizplus · Accepted Answer

Convertible bonds are bonds that give the holder the option to convert the bond into a specified number of shares of the issuer's common stock at a predetermined conversion price. Therefore, option B is the correct answer as it accurately describes one of the main features of convertible bonds. Option A is incorrect as convertible bonds cannot be turned in for early retirement. Option C is incorrect as calling a bond for early retirement is an option held by the issuer, not the holder. Option D is incorrect as convertible bonds give the option to convert to stock to the holder, not the issuer.

Which of the Following Statements Best Describes Convertible Bonds